"2  / 


60th  (.t 

2d 


Congress  \ 

Session  / 


HOUSE  OF  REPRESENTATIVES 


Document 

No.  1213 


^ 5 SSI 

SPECIAL  MESSAGE 


OF  THE 

PRESIDENT  OF  THE 
UNITED  STATES  • 

COMMUNICATED  TO  THE 

TWO  HOUSES  OF  CONGRESS 


DECEMBER  i5>  1908 

SECOND  SESSION  OF  THE 
SIXTIETH  CONGRESS 


December  15,  1908.— Read;  referred  to  the  Committee  on 
Interstate  and  Foreign  Commerce  and  ordered  to  be  printed 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 

1908 


SPECIAL  MESSAGE. 


£ 


To  the  Senate  and  House  of  Representatives : 

In  view  of  tlie  constant  reiteration  of  the  assertion  that  there  was 
some  corrupt  action  by  or  on  behalf  of  the  United  States  Govern- 
ment in  connection  with  the  acquisition  of  the  title  of  the  French 
Company  to  the  Panama  Canal,  and  of  the  repetition  of  the  story 
that  a syndicate  of  American  citizens  owned  either  one  or  both  of 
the  Panama  companies,  I deem  it  wise  to  submit  to  the  Congress 
all  the  information  I have  on  the  subject.  These  stories  were  first 
brought  to  my  attention  as  published  in  a paper  in  Indianapolis, 
called  “The  News,”  edited  by  Mr.  Delavan  Smith.  The  stories 
were  scurrilous  and  libelous  in  character  and  false  in  every  essential 
particular.  Mr.  Smith  shelters  himself  behind  the  excuse  that 
he  merely  accepted  the  statements  which  had  appeared  in  a paper 
published  in  New  York,  “The  World,”  owned  by  Mr.  Joseph 
Pulitzer.  It  is  idle  to  say  that  the  known  character  of  Mr.  Pulitzer 
and  his  newspaper  are  such  that  the  statements  in  that  paper  will 
be  believed  by  nobody ; unfortunately,  thousands  of  persons  are  ill 
informed  in  this  respect  and  believe  the  statements  they  see  in  print, 
even  though  they  appear  in  a newspaper  published  by  Mr.  Pulitzer. 
A Member  of  the  Congress  has  actually  introduced  a resolution  in 
reference  to  these  charges.  I therefore  lay  all  the  facts  before  you. 

The  story  repeated  at  various  times  by  the  World  and  by  its  fol- 
lowers in  the  newspaper  press  is  substantially  as  follows:  That  there 
was  corruption  by  or  on  behalf  of  the  Government  of  the  United 
States  in  the  transaction  by  which  the  Panama  Canal  property  was 
acquired  from  its  French  owners;  that  there  were  improper  dealings 
of  some  kind  between  agents  of  the  Government  and  outside  per- 
sons, representing  or  acting  for  an  American  syndicate,  who  had 
gotten  possession  of  the  French  Company;  that  among  these  persons, 
who  it  was  alleged  made  “huge  profits,”  were  Mr.  Charles  P.  Taft, 
a brother  of  Mr.  William  H.  Taft,  then  candidate  for  the  Presidency, 
and  Mr.  Douglas  Robinson,  my  brother-in-law;  that  Mr.  Cromwell, 
the  counsel  for  the  Panama  Canal  Company  in  the  negotiations, 
was  in  some  way  implicated  with  the  United  States  governmental 

(3) 

■ ' ? 301 52 


4 


V 


authorities  in  these  improper  transactions;  that  the  Government  has 
concealed  the  true  facts,  and  has  destroyed,  or  procured  or  agreed  to 
the  destruction  of,  certain  documents;  that  Mr.  W.  H.  Taft  was 
Secretary  of  War  at  the  time  that  by  an  agreement  between  the 
United  States  Government  and  the  beneficiaries  of  the  deal  all 
traces  thereof  were  “ wiped  out  ” by  transferring  all  the  archives  and 
“ secrets  ” to  the  American  Government,  just  before  the  holding  of 
the  convention  last  June  at  which  Mr.  Taft  was  nominated. 

These  statements  sometimes  appeared  in  the  editorials,  sometimes 
in  the  news  columns,  sometimes  in  the  shape  of  contributions  from 
individuals  either  unknown  or  known  to  be  of  bad  character.  They 
are  false  in  every  particular  from  beginning  to  end.  The  wicked- 
ness of  the  slanders  is  only  surpassed  by  their  fatuity.  So  utterly 
baseless  are  the  stories  that  apparently  they  represent  in  part  merely, 
material  collected  for  campaign  purposes  and  in  part  stories  origi 
nally  concocted  with  a view  of  possible  blackmail.  The  invento 
of  the  story  about  Mr.  Charles  P.  Taft,  for  instance,  evidently  sup 
posed  that  at  some  period  of  the  Panama  purchase  Mr.  W.  H.  Taft 
was  Secretary  of  War,  whereas  in  reality  Mr.  W.  H.  Taft  neveri 
became  Secretary  of  War  until  long  after  the  whole  transaction  ini 
question  had  been  closed.  The  inventor  of  the  story  about  Mr. 
Douglas  Robinson  had  not  taken  the  trouble  to  find  out  the  fact 
that  Mr.  Robinson  had  not  had  the  slightest  connection,  directly  or 
indirectly,  of  any  kind  or  sort  with  any  phase  of  the  Panama  trans- 
action from  beginning  to  end.  The  men  who  attacked  Mr.  Root  in 
the  matter  had  not  taken  the  trouble  to  read  the  public  documents 
which  would  have  informed  them  that  Mr.  Root  had  nothing  to  do 
with  the  purchase,  which  was  entirely  arranged  through  the  Depart- 
ment of  Justice  under  the  then  Attorney-General,  Mr.  Knox. 

Now,  these  stories  as  a matter  of  fact  need  no  investigation  what- 
ever. No  shadow  of  proof  has  been,  or  can  be,  produced  in  behalf 
of  any  of  them.  They  consist  simply  of  a string  of  infamous 
libels.  In  form,  they  are  in  part  libels  upon  individuals,  upon 
Mr.  Taft  and  Mr.  Robinson  for  instance.  But  they  are  in  fact 
wholly,  and  in  form  partly,  a libel  upon  the  United  States  Gov- 
ernment. I do  not  believe  we  should  concern  ourselves  with  the; 
particular  individuals  who  wrote  the  lying  and  libelous  editorials; 
articles  from  correspondents,  or  articles  in  the  news  columns.  The 
real  offender  is  Mr.  Joseph  Pulitzer,  editor  and  proprietor  of  tint 
World.  While  the  criminal  offense  of  which  Mr.  Pulitzer  has  beeh 
guilty  is  in  form  a libel  upon  individuals,  the  great  injury  done  i< 
in  blackening  the  good  name  of  the  American  people.  It  should 


5 


not  be  left  to  a private  citizen  to  sue  Mr.  Pulitzer  for  libel.  He 
should  be  prosecuted  for  libel  by  the  governmental  authorities.  In 
point  of  encouragement  of  iniquity,  in  point  of  infamy,  of  wrong- 
doing, there  is  nothing  to  choose  between  a public  servant  who 
betrays  his  trust,  a public  servant  who  is  guilty  of  blackmail,  or 
theft,  or  financial  dishonesty  of  any  kind,  and  a man  guilty  as  Mr. 
Joseph  Pulitzer  has  been  guilty  in  this  instance.  It  is  therefore  a 
high  national  duty  to  bring  to  justice  this  vilifier  of  the  American 
people,  this  man  who  wantonly  and  wickedly  and  without  one 
shadow  of  justification  seeks  to  blacken  the  character  of  reputable 
private  citizens  and  to  convict  the  Government  of  his  own  country 
in  the  eyes  of  the  civilized  world  of  wrongdoing  of  the  basest  and 
foulest  kind,  when  he  has  not  one  shadow  of  justification  of  any  sort 
or  description  for  the  charge  he  has  made.  The  Attorney-General 
has  under  consideration  the  form  in  which  the  proceedings  against 
Mr.  Pulitzer  shall  be  brought. 

Meanwhile  I submit  to  you  all  the  accompanying  papers,  so  that 
you  may  have  before  you  complete  information  on  the  subject.  I 
pall  your  attention  to  my  communications  in  my  messages  to  the 
Congress  of  January  20,  1902,  March  11,  1903,  December  7,  1903, 
January  4,  1904,  and  December  17,  1906,  in  which  I set  forth  at 
length  the  history  of  various  phases  of  the  whole  transaction.  I 
recall  your  attention  to  the  report  and  opinion  of  the  Attorney- 
General  rendered  to  me,  dated  October  25,  1902,  with  the  accompany- 
ing documents  and  exhibits.  I call  your  attention  to  the  correspond- 
ence of  the  officers  and  agents  of  the  Panama  Canal  Company  with 
the  President  and  other  officers  of  the  United  States  printed  in  Sen- 
ate Document  No.  34,  December  10,  1902 ; also  to  the  copy  of  the 
official  proceedings  of  the  New  Panama  Canal  Company  at  Paris  on 
the  30th  of  December,  1903,  together  with  a report  of  the  Council 
of  Administration  of  that  company,  printed  in  Senate  Document 
No.  133,  January  28,  1904;  and  to  the  copy  of  the  general  convey- 
ance by  the  New  Panama  Canal  Company  to  the  United  States,  also 
copies  of  certain  telegrams  from  the  president  of  the  company  mak- 
ing an  offer  of  sale,  and  Attorney-General  Knox’s  cablegram  in  re- 
sponse printed  in  Senate  Document  No.  285,  March  23,  1906.  I 
call  your  attention  furthermore  to  the  exhaustive  testimony  recorded 
in  public  document  (Sen.  Doc.  No,  41 1,  59th  Cong.,  2nd  sess.),  which 
contains  the  searching  investigation  into  the  whole  transaction  made 
by  the  Congress  for  its  information  and  fully  considered  by  the  Con- 
gress before  it  took  action. 


6 


In  the  Act  approved  June  28,  1902,  “To  provide  for  the  con- 
struction of  a canal  connecting  the  waters  of  the  Atlantic  and 
Pacific  oceans,”  the  Congress  provided  as  follows  : 

“ That  the  President  of  the  United  States  is  hereby  authorized  to 
acquire,  for  and  on  behalf  of  the  United  States,  at  a cost  not  exceed- 
ing forty  millions  of  dollars,  the  rights,  privileges,  franchises,  con- 
cessions, grants  of  land,  right  of  way,  unfinished  work,  plants, 
and  other  property,  real,  personal,  and  mixed,  of  every  name  and 
nature,  owned  by  the  New  Panama  Canal  Company,  of  France,  on 
the  Isthmus  of  Panama,  and  all  its  maps,  plans,  drawings,  records  on 
the  Isthmus  of  Panama,  and  in  Paris,  including  all  the  capital  stock, 
not  less,  however,  than  sixty-eight  thousand  eight  hundred  and  sixty- 
three  shares  of  the  Panama  Railroad  Company,  owned  by  or  held 
for  the  use  of  said  Canal  Company,  provided  a satisfactory  title  to  all 
of  said  property  can  be  obtained.” 

It  thereupon  became  the  duty  of  the  President,  in  execution  of 
this  statute,  to  purchase  the  property  specified  from  the  New  Pan- 
ama Canal  Company,  of  France,  provided  he  could  obtain  a satis- 
factory title.  The  Department  of  Justice  was  instructed  to  examine 
the  title,  and  after  such  an  examination  Attorney-General  Knox 
reported  that  a satisfactory  title  could  be  obtained.  Payment  of  the 
purchase  price  was  thereupon  made  to  the  New  Panama  Canal  Com- 
pany, in  accordance  with  the  act  of  the  Congress,  and  the  property  was 
conveyed  by  that  company  to  the  United  States.  It  was  no  concert 
of  the  President,  or  of  any  officer  of  the  Executive  Department,  t(  > 
inquire  as  to  what  the  New  Panama  Canal  Company  did  with  the  - 
money  which  it  received.  As  a matter  of  fact,  the  New  Panama 
Canal  Company  did  distribute  the  money  between  its  shareholders 
and  the  shareholders  of  the  preceding  Panama  Canal  Company  in 
accordance  with  the  decree  of  a French  court,  aud  the  records  of 
the  French  court  show  who  were  the  shareholders  who  received 
the  money;  but  that  is  no  concern  of  ours. 

I call  your  attention  to  the  accompanying  statement  as  to  the 
attempt  to- form  an  American  company  in  1899  for  the  purpose  of 
taking  over  the  property  of  the  French  company.  This  attempt 
proved  abortive.  There  was  no  concealment  in  its  effort  to  put 
through  this  plan;  its  complete  failure  and  abandonment  being 
known  to  everyone. 

The  important  points  set  forth  in  the  accompanying  papers,  andj 
in  the  papers  to  which  I have  referred  you,  are  as  follows:  j 

The  investigation  of  the  history,  physical  condition,  and  existing' 
value  of  the  enterprise  by  the  Congress,  resulting  in  the  enactment  j 
of  the  law  of  1902  authorizing  the  President  to  acquire  the  property 


1 

for  the  sum  of  $40,000,000  upon  securing  a satisfactory  title  and 
thereupon  to  undertake  the  work  of  construction ; the  failure  of  the 
Americanization  of  the  enterprise  in  1899;  the  transmission  by  me 
to  the  Congress  from  time  to  time  of  full  information  and  advice  as 
to  the  relations  of  this  Government  to  transit  across  the  Isthmus 
and  under  the  treaties,  as  to  the  negotiations  and  final  acquisition 
of  the  title,  and  later  as  to  the  progress  and  condition  of  the  work 
of  construction ; the  previous  authorization  of  the  sale  to  the  United 
States  by  the  stockholders  of  the  new  company  and  their  subsequent 
ratification ; the  examination  and  approval  of  the  title  by  Mr.  Knox; 
the  arrangements  for  payment  through  J.  P.  Morgan  & Company  as 
the  fiscal  agents  of  this  Government,  and  the  payment  accordingly 
at  the  Bank  of  France  upon  proper  official  receipts  to  the  liquidators 
acting  under  the  decree  of  the  French  court,  the  French  govern- 
mental body  having  jurisdiction  in  the  matter;  and,  finally,  the  sub- 
sequent apportionment  and  distribution  of  the  fund  to  the  creditors 
and  stockholders  of  the  two  companies  under  that  decree. 

The  Panama  Canal  transaction  was  actually  carried  through  not 
by  either  the  then  Secretary  of  State,  Mr.  John  Hay,  or  the  then 
Secretary  of  War,  Mr.  Elihu  Root,  both  of  whom,  however,  were 
cognizant  of  all  the  essential  features;  but  by  the  then  Attorney- 
General,  Mr.  P.  C.  Knox,  at  present  Senator  from  Pennsylvania.  I 
directed  or  approved  every  action,  and  am  responsible  for  all  that 
was  done  in  carrying  out  the  will  of  the  Congress ; and  the  provisions 
of  the  law,  enacted  by  Congress  after  exhaustive  examination  and 
discussion,  were  scrupulously  complied  with  by  the  Executive, 
While  the  transaction  was  pending  I saw  Mr.  Cromwell  but  two  or 
three  times,  and  my  communications  with  him  were  limited  to  the 
exchange  of  purely  formal  courtesies.  Secretary  Hay  occasionally 
saw  him,  in  the  same  manner;  I doubt  whether  Mr.  Root  held 
any  conversation  with  him.  The  Attorney-General  saw  him  fre- 
quently, as  he  was  counsel  for  the  Panama  Company;  their  com- 
munications were  official,  as  representing  the  two  sides.  I enclose 
copies  of  my  correspondence  with  Mr.  Win.  Dudley  Foulke,  who 
first  brought  these  scandalous  stories  to  my  attention,  and  with 
Senator  Knox  and  Mr.  Cromwell,  to  whom  I wrote  in  response  to 
the  request  of  a gentleman  who  wished  to  know  about  the  stock- 
holders in  the  Panama  Canal  Company. 

The  title  to  the  Panama  Canal  properties  was  vested  in  the  New 
Panama  Canal  Company  of  France,  which  was  the  legal  owner 
thereof,  and  the  old  or  so-called  De  Lesseps  Company  had  a large 


8 


, 


equity  therein.  The  title  was  not  in  a New  Jersey  company  nor  in  any 
other  American  company,  nor  did  this  Government  have  any  deal- 
ings with  any  American  company  throughout  the  affair. 

The  exact  legal  status,  to  the  most  minute  detail,  appears  in  the 
exhaustive  opinion  of  Attorney-General  Knox  approving  the  title  to 
be  given  to  the  United  States,  which  clearly  establishes  that  the 
only  party  dealt  with  was  the  New  Panama  Canal  Company  of  France 
(with  the  concurrence  of  the  liquidator  of  the  old  company)  and  not 
any  American  corporation  or  syndicate. 

The  action  of  the  United  States  Government  was,  of  course, 
wholly  uninfluenced  by,  and  had  nothing  whatever  to  do  with,  any 
question  as  to  who  were,  or  who  had  been,  the  security- holders  of 
either  the  new  or  the  old  company.  Who  such  security-holders 
were  was  not  our  affair.  If,  as  a matter  of  fact,  the  Canal  com- 
panies, either  or  both,  had  been  owned  by  American  citizens  or  by 
citizens  of  any  other  nationality,  it  would  not  have  altered  in  the 
slightest  degree  the  action  taken  by  this  Government.  Our  concern 
was  to  get  the  canal  property  which  was  owned  by  the  French 
Company,  and  to  see  that  the  title  was  clear.  Our  transactions  were 
carried  on  openly,  and  were  published  in  detail,  and  we  dealt  solely 
(so  far  as  the  interests  of  the  old  Panama  Company  were  concerned) 
with  the  liquidator  appointed  by  the  proper  French  governmental 
body,  the  Civil  Tribunal  of  the  Seine,  and  in  accordance  with  the 
decree  of  this  same  tribunal,  with  the  New  Panama  Canal  Com- 
pany, which  also  went  into  liquidation  upon  the  sale  to  the  United 
States.  All  our  transactions  were  carried  on  openly,  and  were  pub- 
lished in  detail. 

The  distribution  of  our  payment  of  $40,000,000  follows  the  award 
of  arbitrators  chosen  by  the  new  company  and  the  liquidator, 
authorized  by  the  decree  of  this  same  Civil  Tribunal  of  the  Seine,  and 
providing  for  a determination  of  the  proportionate  division  between 
the  new  and  old  companies.  We  paid  the  money  through  the 
New  York  banking  house  of  Messrs.  J.  P.  Morgan  & Company, 
acting  as  fiscal  agents  of  this  Government,  into  the  Bank  of  France 
in  Paris.  The  receipts  and  accounts  of  our  Treasury  Department 
show  the  payment  of  the  money  into  the  Bank  of  France  and 
account  for  the  money  being  paid  over  to  the  liquidator  appointed  by 
the  Civil  Tribunal  of  the  Seine  and  to  the  New  Panama  Canal  Com- 
pany of  France,  the  proportion  of  the  forty  million  dollars  being 

128.600.000  francs  to  the  liquidator  of  the  old  company  and 

77.400.000  francs  to  the  New  Panama  Canal  Company  of  France  in 


9 


liquidation.  In  these  payments  we  followed  to  the  letter  the  decree 
of  the  governmental  tribunal  of  France  which  had  the  authority  to 
make  such  a decree,  the  Civil  Tribunal  of  the  Seine.  We  had 
neither  desire  nor  authority  to  go  behind  this  decree  of  this  proper 
governmental  body,  as  all  the  conflicting  rights  of  the  security- 
holders  of  both  companies  had  been  settled  by  the  decree  of  said 
court  by  ratification  of  the  arbitration  which  resulted  in  that  division. 

I wish  to  make  as  clear  as  possible,  and  as  emphatic  as  possible, 
the  statement  that  we  did  not  have  anything  to  do  with  the  distri- 
bution of  a dollar  of  the  $40,000,000  we  paid  as  regards  any  stock- 
holder or  bondholder  of  the  French  Companies,  save  that  we  fol- 
lowed out  the  award  of  the  arbitrators  appointed  in  accordance 
with  the  decree  of  the  French  court  which  had  dealt  with  the  sub- 
ject in  awarding  a certain  proportion  to  the  old  company  and  a cer- 
tain proportion  to  the  new  company.  Any  question  concerning  the 
stockholders,  bondholders,  or  other  beneficiaries  of  the  proceeds  of 
sale  was  purely  a question  for  the  Civil  Tribunal  of  the  Seine,  the 
French  governmental  body,  with  which  this  Nation  had  nothing 
whatever  to  do. 

Under  these  circumstances  there  was  not  the  slightest  need  for 
Mr.  Cromwell  to  give  any  information  on  the  subject  of  the  com- 
panies for  which  he  had  been  counsel.  This  Government  has  no 
concern  with  Mr.  Cromwell’s  relation  to  these  companies,  or  either 
of  them,  or  with  the  amount  of  his  professional  compensation ; it 
was  not  the  affair  of  this  Government  to  inquire  who  were  the 
security  holders  of  the  companies.  Nevertheless,  Mr.  Cromwell,  of 
his  own  accord,  has  submitted  to  me,  together  with  a copy  of  his 
statement  published  on  the  nth  instant,  and  which  I transmit 
herewith,  a full  list  of  the  stockholders  of  the  New  Panama  Canal 
Company  of  France  on  January  15,  1900  (numbering  over  6,000), 
and  a list  of  all  stockholders  who  were  present  at  a special  meeting 
of  the  company  held  February  28,  1902,  immediately  after  the 
cable  offer  of  the  company  was  made  to  the  United  States  (January 
9— 11,  1902),  to  accept  the  appraisement  of  $40,000,000  made  by  the 
Isthmian  Canal  Commission,  and  to  sell  for  said  sum  the  Panama 
Canal,  concessions,  and  other  property,  and  the  shares  of  the 
Panama  Railroad  Company.  He  has  also  furnished  me  a certified 
copy  of  the  final  report  of  the  liquidator  of  the  old  company,  which 
was  filed  on  June  25th  last  and  formally  approved  by  the  Civil  Tri- 
bunal of  the  Seine,  together  with  a summary  account  prepared  and 
signed  by  said  liquidator  as  late  as  the  24th  ultimo.  I also  transmit 


I 


IO 

a translation  of  the  two  resolutions,  with  the  vote  upon  them,  adopted 
at  a meeting  of  the  stockholders  of  the  new  company  held  on  April 
23,  1904,  for  the  purpose  of  finally  ratifying  the  sale. 

All  these  documents  I herewith  transmit  as  a part  of  this  mes- 
sage. It  appears  from  them  that  the  creditors  of  the  old  company 
number  226,296  parties  who  have  received  dividends  out  of  the 
funds  in  the  hands  of  the  liquidator,  who,  in  his  letter,  states  that 
in  this  present  month  of  December  the  second  and  last  distribution 
to  the  creditors  will  be  begun,  and  that  the  average  dividend  here- 
tofore paid  to  each  individual  was  782  francs,  or  $156.  No  pay- 
ment whatever  was  or  will  be  made  upon  the  stock  of  the  old  com- 
pany, as  it  was  worthless  from  the  day  De  Lesseps  failed,  and  this 
cuts  out  from  consideration  all  misleading  statements  regarding  a 
possible  purchase  by  anybody  of  the  stock  of  the  old  Panama  Canal 
Company.  It  has  not  received,  and  will  not  receive,  a penny. 
Even  upon  the  bonded  indebtedness  the  dividend,  I am  thus  in- 
formed, will  amount,  in  the  aggregate,  to  only  about  ten  per  centum. 
It  likewise  plainly  appears  that  this  distribution  by  the  liquidator 
of  the  old  company  has  been. openly  conducted  at  his  office  in  Paris, 
No.  50  Rue  Etienne  Marcel,  where  all  the  receipts,  accounts,  and 
records  of  his  payments  are  on  file. 

The  New  Panama  Canal  Company  of  France  is  in  liquidation. 
As  the  accompanying  papers  set  forth,  this  liquidated  company 
received  as  its  proportion  of  the  $40,000,000  the  sum  of  77,400,000 
francs,  and  this  amount  was  distributed  by  the  liquidation  in 
three  payments  through  four  leading  banks  of  Paris,  covering  a 
period  of  the  past  four  years,  and  to  shareholders  numbering  about 

6.000.  Every  step  of  the  transaction  was  not  only  taken  publicly, 
but  was,  contemporaneously  therewith,  advertised  in  the  legal  and 
financial  papers  of  France,  and  the  banks  making  the  payments  took 
proper  receipts  from  all  the  parties  to  whom  payments  were  made, 
as  is  customary  in  such  cases. 

The  capital  of  the  New  Panama  Canal  Company  of  France  was 

65.000. 000  francs,  and  the  distribution  thus  made  amounted  to 
about  130  francs  on  each  share  of  100  francs.  No  dividends  were 
paid  during  the  ten  years  of  the  company’s  existence.  It  therefore 
resulted  that  the  shareholders  only  recovered  their  original  invest- 
ment with  annual  interest  of  about  three  per  cent. 

The  accounts  and  records  of  this  liquidation,  which  was  concluded 
in  June  last,  are  011  deposit  with  the  Credit  Eyonnaise  of  Paris  as  a 
proper  custodian  of  the  same,  appointed  upon  such  liquidation. 


Recently  a request  was  made  by  a private  individual  to  inspect  the 
records  of  these  payments,  but  answer  was  made  by  the  custodians 
that  they  saw  no  proper  reason  for  granting  such  request  by  a 
stranger,  and,  inasmuch  as  there  is  not  the  slightest  ground  for 
suspicion  of  any  bad  faith  in  the  transaction,  it  hardly  seems  worth 
while  to  make  the  request ; but  if  the  Congress  desires,  I have  no 
doubt  that  on  the  request  of  our  Ambassador  in  Paris,  the  lists  of 
individuals  will  be  shown  him. 

As  a matter  of  fact,  there  is  nothing  whatever,  in  which  this  Gov- 
ernment is  interested,  to  investigate  about  this  transaction.  So  far 
as  this  Government  is  concerned,  every  step  of  the  slightest  impor- 
tance has  been  made  public  by  its  Executive,  and  every  step  taken  in 
France  has  there  been  made  public  by  the  proper  officials. 

The  Congress  took  the  action  it  did  take  after  the  most  minute  and 
exhaustive  examination  and  discussion,  and  the  Executive  carried 
out  the  direction  of  the  Congress  to  the  letter.  Every  act  of  this 
Government,  every  act  for  which  this  Government  had  the  slightest 
responsibility,  was  in  pursuance  of  the  act  of  the  Congress  here,  and 
following  out  the  decree  of  the  Civil  Tribunal  of  the  Seine  in  France. 

Furthermore,  through  the  entirely  voluntary  act  of  Mr.  Crom- 
well, I am  now  able  to  present  to  you  full  information  as  to  these 
actions  in  France  with  which  this  Government  did  not  have  any 
concern,  and  which  are  set  forth  in  the  accompanying  papers. 

It  may  be  well  to  recall  that  the  New  Panama  Canal  Company 
of  France  did  not  itself  propose  or  fix  the  figure  $40,000,000  as  the 
valuation  of  the  canal  and  railroad  properties.  That  sum  was  first 
fixed  by  our  Isthmian  Canal  Commission  in  its  reports  to  the  Con- 
gress after  two  years  of  investigation  and  personal  inspection  of  all  the 
properties  and  work  already  done,  whereby  the  properties  and  the 
work  done  were  in  detail  appraised  at  that  sum  as  their  value  to  the 
United  States.  The  French  company  steadily  refused  for  over  two 
years  to  make  any  offer  whatever  in  answer  to  the  many  written 
requests  of  the  Isthmian  Canal  Commission;  and  when  its  president 
did  approach  the  question  of  price,  it  was  on  the  basis  of  $109,000,000. 
Eater,  under  conditions  not  necessary  now  to  rehearse,  the  company, 
by  cable,  accepted  the  appraisement  of  $40,000,000  made  by  our 
Commission.  This  Government,  therefore,  acquired  all  the  proper- 
ties and  concessions,  both  of  canal  and  railroad,  at  its  own  valuation 
and  price,  the  Congress  approving  the  price,  and  authorizing  the 
expenditure  of  the  money,  after  the  most  exhaustive  examination 
and  discussion. 


I transmit  herewith  lists  of  the  documents  in  the  possession  of  the 
Department  of  State,  the  Department  of  Justice,  and  the  Department 
of  War,  so  that,  if  the  Congress  sees  fit,  it  may  direct  that  they 
be  printed.  They  are,  and  always  have  been,  open  to  the  examina- 
tion of  any  Member  of  the  Congress.  There  is  no  object  in  printing 
them,  but  there  is  also  no  objection  to  printing  them,  save  that  it  is 
a useless  expense. 

I also  transmit  a list  of  the  documents  furnished  by  Mr.  Crom- 
well. 

Theodore  Roosevelt. 

The  White  House,  December  75,  1908. 


APPENDIX. 


Hot  Springs,  Va.,  November  29 , 1908. 

The  President. 

Sir  : The  Indianapolis  News,  not  only  during  the  campaign  but 
even  after  its  close,  has  been  repeatedly  and  continually  making 
serious  charges  against  your  Administration  as  well  as  against  Mr. 
Taft  in  connection  with  the  Panama  purchase,  as,  for  example,  the 
following : 

“THE  PANAMA  MATTER. 

M The  campaign  is  over  and  the  people  will  have  to  vote  to-morrow 
without  any  official  knowledge  concerning  the  Panama  Canal  deal. 
It  has  been  charged  that  the  United  States  bought  from  Ameri- 
can citizens  for  $40,000,000  property  that  cost  those  citizens  only 
$12,000,000.  Mr.  Taft  was  Secretary  of  War  at  the  time  the 
negotiation  was  closed.  There  is  no  doubt  that  the  Government 
paid  $40,000,000  for  the  property.  But  who  got  the  money?  We 
are  not  to  know.  The  Administration  and  Mr.  Taft  do  not  think  it 
right  that  the  people  should  know.  The  President’s  brother-in-law 
is  involved  in  the  scandal,  but  he  has  nothing  to  say.  The  candi- 
date’s brother  has  been  charged  with  being  a member  of  the  syndi- 
cate. He  has,  it  is  true,  denied  it.  But  he  refuses  to  appeal  to  the 
evidence , all  of  which  is  in  the  possession  of  the  Administration  and 
wholly  inaccessible  to  outsiders.  For  weeks  this  scandal  has  been 
before  the  people.  The  records  are  in  Washington,  and  they  are 
public  records.  But  the  people  are  not  to  see  them — till  after  elec- 
tion, if  then.” 

Even  after  the  election  this  has  been  continued,  it  being  said  that 
Mr.  Taft’s  “ weakness  ” in  Indiana  (where  he  ran  many  thousands 
ahead  of  any  other  Republican  candidate)  was  due  in  great  measure 
to  this  alleged  scandal,  and  as  late  as  November  18th  another  edi- 
torial appears  which  I enclose.  What  are  the  facts,  may  I ask,  in 
regard  to  these  charges?  Where  are  these  “inaccessible”  records? 
When  did  they  come  into  possession  of  the  Government,  and  what 
do  they  contain?  If  the  statements  of  the  News  are  true,  our  peo- 
ple ought  to  know  it ; if  they  are  not  true,  they  ought  to  have  some 
just  means  of  estimating  what  credit  should  be  given  in  other  mat- 
ters to  a journal  which  thus  disseminates  falsehoods. 

Yours,  faithfully, 

(Signed)  Wm.  Dudeey  Foueke. 

(13) 


The  White  House, 
Washington , December  /,  1908. 

My  Dear  Mr.  Foulke  : I have  received  your  letter  of  the  29th 
ultimo  and  have  read  it  in  connection  with  your  previous  letters 
enclosing  quotations  from  the  Indianapolis  News,  a paper  edited  by 
Mr.  Delavan  Smith.  As  Mr.  Smith  certainly  knew  that  all  the 
statements  he  made  were  false,  both  as  to  this  Panama  matter  and 
as  to  the  other  matters  of  which  yon  enclosed  me  clippings,  and 
inasmuch,  therefore,  as  the  exposure  of  the  falsity  will  not  affect 
his  future  statements,  I am  not  very  clear  what  good  will  result 
from  such  exposure.  But  inasmuch  as  you  evidently  earnestly 
desire  some  answer  to  be  made,  and  inasmuch  as  you  say  that  some 
reputable  people  appear  to  believe  the  falsehoods  of  the  News  and 
Mr.  Smith,  and  inasmuch  as  you  seem  to  think  that  his  falsehoods 
as  regards  the  Panama  matter  are  the  most  prominent,  I will  answer 
them. 

The  News  states  in  one  of  its  issues  that  probably  some  of  the 
documents  dealing  with  the  matter  have  been  destroyed.  This  is 
false.  Not  one  has  been  destroyed.  It  states  that  the  last  docu- 
ments were  sent  over  in  June  of  this  year,  the  object  of  this  partic- 
ular falsehood  being,  apparently,  to  connect  the  matter  in  some  way 
with  the  nomination  of  Mr.  Taft.  As  a matter  of  fact,  the  last 
papers  that  we  have  received  of  any  kind  were  sent  over  to  us  in 
May,  1904,  and  they  have  been  accessible  to  every  human  being 
who  cared  to  look  at  them  ever  since,  and  are  accessible  now. 
Any  reputable  man  within  or  without  the  Congress,  Republican  or 
Democrat,  has  now  and  always  has  had  the  opportunity  to  examine 
any  of  these  documents.  You  quote  the  News  as  stating  that  “the 
people  have  no  official  knowledge  concerning  the  Panama  Canal 
deal.”  The  fact  is  that  the  people  have  had  the  most  minute  official 
knowledge;  that  every  important  step  in  the  transaction  and  every 
important  document  have  been  made  public  in  communications  to 
the  Congress  and  through  the  daily  press,  and  the  whole  matter  has 
been  threshed  over  in  all  its  details  again  and  again  and  again. 

The  News  gives  currency  to  the  charge  that  “the  United  States 
bought  from  American  citizens  for  forty  million  dollars  property 
that  cost  these  citizens  only  twelve  million  dollars.”  The  statement 
is  false.  The  United  States  did  not  pay  a cent  of  the  forty  million 
dollars  to  any  American  citizen.  The  News  says  that  there  is  no 
doubt  that  the  Government  paid  forty  million  dollars  for  the  prop- 
erty, and  continues — “But  who  got  the  money?  We  are  not  to 
know.  The  Administration  and  Mr.  Taft  do  not  think  it  right  that 
the  people  should  know.”  Really,  this  is  so  ludicrous  as  to  make 
one  feel  a little  impatient  at  having  to  answer  it.  The  fact  has 
been  officially  published  again  and  again  that  the  Government  paid 
forty  million  dollars,  and  that  it  paid  this  forty  million  dollars  direct 
to  the  French  Government,  getting  the  receipt  of  the  liquidator 
appointed  by  the  French  Government  to  receive  the  same.  The 
United  States  Government  has  not  the  slightest  knowledge  as  to  the 


*5 


particular  individuals  among  whom  the  French  Government  distrib- 
uted the  sum.  This  was  the  business  of  the  French  Government. 
The  mere  supposition  that  any  American  received  from  the  French 
Government  a “ rake  off  ” is  too  absurd  to  be  discussed.  It  is  an 
abominable  falsehood,  and  it  is  a slander  not  against  the  American 
Government  but  against  the  French  Government. 

The  News  continues,  saying  that  “The  President’s  brother-in-law 
is  involved  in  the  scandal,  but  he  has  nothing  to  say.”  The  Presi- 
dent’s brother-in-law  was  involved  in  no  scandal.  Mr.  Delavan 
Smith  and  the  other  people  who  repeated  this  falsehood  lied  about 
the  President’s  brother-in-law ; but  why  the  fact  that  Mr.  Smith  lied 
should  be  held  to  involve  Mr.  Robinson  in  a “scandal”  is  difficult 
to  understand.  The  scandal  affects  no  one  but  Mr.  Smith ; and  his 
conduct  has  been  not  merely  scandalous  but  infamous.  Mr.  Rob- 
inson had  not  the  slightest  connection  of  any  kind,  sort,  or  descrip- 
tion at  any  time  or  under  any  circumstances  with  the  Panama  matter. 
Neither  did  Mr.  Charles  Taft.  The  News  says  that  Mr.  Taft  was  a 
member  of  the  “syndicate.”  So  far  as  I know  there  was  no  syndicate; 
there  certainly  was  no  syndicate  in  the  United  States  that  to  my 
knowledge  had  any  dealings  with  the  Government,  directly  or  indi- 
rectly ; and  inasmuch  as  there  was  no  syndicate,  Mr.  Taft  naturally 
could  not  belong  to  it.  The  News  demands  that  Mr.  Taft  “appeal 
to  the  evidence,”  by  which  it  means  what  it  calls  “the  records” — 
that  is,  the  mass  of  papers,  which  are  stored  in  the  War  Department, 
save  such  as,  because  of  their  technical  character  and  their  usefulness 
in  the  current  work  of  the  canal,  it  has  been  found  advisable  to  send 
to  the  Isthmus. 

All  of  these  documents  that  possessed  any  importance  as  illustrat- 
ing any  feature  of  the  transaction  have  already  been  made  public. 
There  remains  a great  mass  of  documents  of  little  or  no  importance 
which  the  administration  is  entirely  willing  to  have  published,  but 
which  because  of  their  mass  and  pointlessness,  nobody  has  ever 
cared  to  publish.  Any  reputable  man  can  have  full  access  to  these 
documents.  If  you  or  Mr.  Swift,  or  Mr.  Booth  Tarkington,  or  Mr. 
George  Ade — in  short,  if  any  reputable  man — will  come  on  here,  he 
shall  have  free  access  to  the  documents  and  can  look  over  everything 
for  himself.  Congress  can  have  them  all  printed  if  it  wishes;  but 
no  Congressman  has  ever  so  far  intimated  any  desire  that  this 
should  be  done;  I suppose  because  to  print  such  a mass  of  docu- 
ments would  be  a great  expense,  and,  moreover,  an  entirely  useless 
expense,  unless,  which  is  not  the  case,  there  was  some  object  in 
printing  them. 

Now,  my  dear  Mr.  Foulke,  I have  answered  in  detail  your  ques- 
tions and  the  statements  of  the  News.  You  are  quite  welcome  to 
print  my  answer ; but  I must  frankly  add  that  I don’t  think  any 
good  will  come  from  doing  so.  Mr.  Delavan  Smith  is  a conspicu- 
ous offender  against  the  laws  of  honesty  and  truthfulness;  but  he 
does  not  stand  alone.  He  occupies,  for  instance,  the  same  evil  emi- 
nence with  such  men  as  Mr.  Uaffan  of  the  New  York  Sun,  editorials 


i6 


of  whose  paper  you  or  others  have  from  time  to  time  called  to  my 
attention,  just  as  you  have  called  to  my  attention  these  editorials  of 
the  Indianapolis  News.  I never  see  an  editorial  in  anyone  of  these 
or  similar  papers  unless  for  some  reason  it  is  sent  to  me  by  you  or 
by  some  one  else;  and  of  the  editorials  thus  sent  me  there  is  hardly 
one  which  does  not  contain  some  willful  and  deliberate  perversion  of 
the  truth.  For  example,  I have  just  made  public  the  following 
statement  concerning  a tissue  of  utterly  false  statements  which 
appeared  in  Mr.  Laffan’s  paper,  the  Sun : 

•“As  the  New  York  Sun  story  entitled  ‘Roosevelt  and  Prairie  Oil’ 
has  seemed  to  deceive  a number  of  people,  the  following  statement 
is  made  public  about  it : 

“ As  soon  as  the  story  was  brought  to  President  Roosevelt’s  atten- 
tion he  not  only  called  for  reports  concerning  the  statements  from 
the  Department  of  Justice  and  the  Department  of  the  Interior,  but 
also  communicated  with  ex-Secretary  Hitchcock  so  as  to  be  sure 
that  the  President’s  recollection  was  not  at  fault.  The  story  is  false 
in  every  particular,  from  beginning  to  end.  Not  only  is  there  no 
such  report  in  the  Department  of  Justice  and  never  has  been,  but  no 
such  report  was  ever  made.  In  granting  the  franchise  of  the  Prairie 
Oil  and  Gas  Company  the  President  simply  approved  the  recom- 
mendation of  Secretary  Hitchcock  submitted  to  him  precisely  as  all 
other  recommendations  were  submitted.  Moreover,  in  every  case 
referring  to  the  granting  of  franchises  or  the  adoption  of  regulations 
as  regards  oil  and  gas  franchises  in  Oklahoma  and  the  Indian  Terri- 
tory, the  President  approved  the  recommendation  of  Secretary  Hitch- 
cock, with  the  exception  of  one  small  and  unimportant  grant  to  a 
Delaware  Indian  to  whom  the  Delaware  Indians,  in  recognition  of 
eight  years  of  service  to  the  tribe,  had  voted  in  council  a fee  of  $50,000, 
which  he  had  declined  to  accept,  and  who  was  given  twice  the  usual 
amount  of  land.  The  statement  about  the  alleged  promise  to  a 
western  Senator  is  as  ridiculous  a falsehood  as  the  re'st  of  the  story.” 

The  fact  is  that  these  particular  newspapers,  habitually  and  con- 
tinually and  as  a matter  of  business,  practice  every  form  of  mendacity 
known  to  man,  from  the  suppression  of  the  truth  and  the  suggestion 
of  the  false,  to  the  lie  direct.  Those  who  write  or  procure  others  to 
write  these  articles  are  engaged  in  the  practice  of  mendacity  for 
hire;  and  surely  there  can  be  no  lower  form  of  gaining  a livelihood. 
Whether  they  are  paid  by  outsiders  to  say  what  is  false,  or  whether 
their  profit  comes  from  the  circulation  of  the  falsehoods,  is  a matter 
of  small  consequence.  It  is  utterly  impossible  to  attempt  to  answer 
all  of  their  falsehoods.  When  any  given  falsehood  is  exposed,  they 
simply  repeat  it  and  circulate  another.  If  they  were  mistaken  in 
the  facts,  if  they  possessed  in  their  make-up  any  shred  of  honesty,  it 
would  be  worth  while  to  set  them  right.  But  there  is  no  question 
at  all  as  to  any  “ mistake  ” or  “ misunderstanding  ” on  their  part. 
They  state  what  they  either  know  to  be  untrue,  or  could  by  the 
slightest  inquiry  find  out  to  be  untrue. 


17 


I doubt  if  they  themselves  remember  their  own  falsehoods  for 
more  than  a very  brief  period ; and  I doubt  still  more  whether  any- 
body else  does.  Under  these  circumstances  it  seems  hardly  worth 
while  to  single  out  for  special  mention  one  or  two  given  falsehoods 
or  one  particular  paper,  the  moral  standard  of  which  is  as  low  as, 
but  no  lower  than,  that  of  certain  other  papers.  Of  course  now 
and  then  I am  willing  to  denounce  a given  falsehood,  as,  for 
instance,  as  regards  this  case  of  the  Indianapolis  News,  or  the  case 
I have  quoted  of  the  New  York  Sun,  simply  because  it  appears  that 
some  worthy  people  are  misled  or  puzzled  by  the  direct  shameless- 
ness of  the  untruth.  But  ordinarily  I do  not  and  can  not  pay  heed 
to  these  falsehoods.  If  I did  I would  not  be  able  to  do  my  work. 
My  plan  has  been  to  go  ahead,  to  do  the  work,  and  to  let  these  peo- 
ple and  those  like  them  yell ; and  then  to  trust  with  abiding  confi- 
dence to  the  good  sense  of  the  American  people  in  the  assured 
conviction  that  the  yells  will  die  out,  the  falsehoods  be  forgotten, 
and  the  work  remain. 

Therefore,  as  far  as  I am  concerned  I would  rather  make  no 
answer  whatever  in  this  case.  But  I have  much  confidence  in  your 
judgment,  and  if  you  feel  that  these  men  ought  to  be  exposed,  why 
you  are  welcome  to  publish  this  letter.  There  is  no  higher  and 
more  honorable  calling  than  that  of  the  men  connected  with  an 
upright,  fearless,  and  truthful  newspaper;  no  calling  in  which  a man 
can  render  greater  service  to  his  fellow-countrymen.  The  best  and 
ablest  editors  and  writers  in  the  daily  press  render  a service  to  the 
community  which  can  hardly  be  paralleled  by  the  service  rendered 
by  the  best  and  ablest  of  the  men  in  public  life,  or  of  the  men  in 
business.  But  the  converse  of  this  proposition  is  also  true.  The 
most  corrupt  financiers,  the  most  corrupt  politicians,  are  no  greater 
menace  to  this  country  than  the  newspaper  men  of  the  type  I have 
above  discussed.  Whether  they  belong  to  the  yellow  press  or  to 
the  purchased  press,  whatever  may  be  the  stimulating  cause  of  their 
slanderous  mendacity,  and  whatever  the  cloak  it  may  wear,  matters 
but  little.  In  any  event  they  represent  one  of  the  potent  forces  for 
evil  in  the  community. 

Yours,  very  truly,  Theodore  Roosevelt. 

Hon.  William  Dudley  Foulke, 

Richmond , Ind. 


December  8,  1908. 

My  Dear  Senator:  Mr.  * * * is  trying  to  look  into  that 

Panama  Canal  transaction,  and  he  has  asked  me  for  information 
that  I am  not  able  to  furnish.  I do  not  know  whether  it  can  be 
furnished  at  all,  but  if  it  can  be  I suppose  you  would  know  more 
about  it  than  anyone  else.  He  wants  to  get  at  the  stock  books  of 
the  Panama  Canal  companies,  old  and.  new,  if  possible,  to  find  out 
H.  Doc.  1213,  60-2 2 


i8 

the  votes  by  which  the  stockholders  agreed  to  the  various  transac- 
tions with  the  United  States  Government.  Did  this  Government 
obtain  those  stock  books,  or  any  records  which  would  show  who  the 
stockholders  were?  If  not,  have  you  any  idea  where  we  could  obtain 
any  information  about  such  records? 

Sincerely  yours, 

Theodore  Roosevelt. 

Hon.  P.  C.  Knox, 

United  States  Senate. 


Senate  of  the  United  States, 

Committee  on  Rules, 

Dece7nber  8. 

Dear  Mr.  President  : This  Government  did  not  get  the  stock 
books  of  either  the  old  or  new  Panama  Canal  company.  We  did  not 
buy  the  corporations  or  their  stocks ; we  only  bought  the  property. 
We  had  no  dealings  with  the  old  company  at  all.  That  company 
and  the  new  company  adjusted  their  equities  in  the  French  courts. 
All  I cared  for  was  to  see  that  they  did  adjust  them  in  such  a way 
as  to  protect  this  Government.  In  the  absence  of  any  suggestion  of 
irregularity — and  there  was  no  such  suggestion — it  was  a matter  of 
indifference  to  the  United  States  who  owned  the  stock  of  the  new  com- 
pany. The  only  question  was,  did  we  want  the  property  at  the  price. 
Congress  decided  that  we  did,  and  all  you  had  to  do  was  to  deter- 
mine if  you  could  get  a good  title  to  it,  and  then  go  ahead  and  make 
the  purchase.  If  there  was  any  question  as  to  our  desire  for  the 
property  at  the  price  depending  upon  the  personnel  of  the  stock- 
holders, that  was  one  for  the  Congress,  which  decided  that  we  would 
take  it.  You  executed  the  law  directing  the  purchase,  and  that  is 
all  there  is  to  it  so  far  as  you  are  concerned. 

My  recollection  is  that  the  final  ratification  of  the  sale  was  almost 
unanimous  by  the  stockholders  of  the  new  company;  not  more 
than  four  or  five  small  dissenting  votes. 

Sincerely,  yours, 

(Signed)  P.  C.  Knox. 


December  8,  1908. 

My  Dear  Mr.  Cromwell:  A friend  of  mine  has  asked  me  for 
certain  facts  about  the  Panama  Canal  transaction,  as  to  which  I 
should  be  obliged  for  any  information  you  can  give  me. 

Is  there  any  way  of  getting  at  the  stock  books  of  the  Panama 
Canal  Companies,  old  and  new,  or  any  official  record  of  the  votes  of 
the  stockholders  on  the  different  proposals  made  to  them  for  enter- 
ing into  agreement  with  thp  United  States  for  the  sale  of  their 
rights  in  Panama? 


Did  the  United  States  Government  ever  get  possession  of  any  of 
these  data?  If  not,  can  you  tell  me  where  they  can  be  obtained,  if 
in  private  possession  here  in  America,  or  where  they  can  be  looked 
up  in  France? 

With  regards,  sincerely  yours, 

Theodore  Rooseveet. 

William  Nelson  Cromwell,  Esq., 

49  Wall  Street , New  York. 


[Mr.  Cromwell,  in  reply,  sent  a copy  of  the  following  statement.] 

Mr.  William  Nelson  Cromwell,  at  his  office,  to-day  authorized 
the  following  statement: 

uMy  attention  has  been  called  to  a statement  issued  by  the  edi- 
tor of  the  Indianapolis  News  in  which  he  attempts  to  reply  to  the 
charge  made  by  President  Roosevelt  that  certain  statements  made 
in  the  Indianapolis  News,  both  before  and  since  the  recent  election 
and  relating  to  the  purchase  of  the  Panama  Canal  by  the  United 
States,  were  false  and  untrue.” 

The  President  said: 

“The  News  gives  currency  to  the  charge  that  ‘the  United  States 
bought  from  American  citizens  for  $40,000,000  property  that  cost 
these  citizens  only  $12,000,000.’  The  statement  is  false.  The 
United  States  did  not  pay  a cent  of  the  $40,000,000  to  any  Ameri- 
can citizen,  etc.” 

From  the  statement  issued  in  reply  by  the  editor  of  the  News,  I 
quote  the  following  : 

“ The  only  man  who  paid  any  attention  to  them  (that  is,  the 
criticisms  referred  to,  etc.)  was  Mr.  Charles  P.  Taft,  who  did  deny 
that  he  was  in  any  way  related  to  the  affair.  We  "had  no  word  from 
the  President  or  Mr.  Taft.  The  other  men,  such  as  Cromwell  and 
Morgan,  who  were  believed  to  have  full  information  in  regard  to 
the  business,  said  nothing.” 

And  he  attempts  to  justify  the  publication  of  the  false  statements 
appearing  in  his  paper  by  saying  that  they  “ were  based  largely  on 
statements  of  the  New  York  World,  criticisms  which  were  made  over 
and  over  again  during  the  campaign,  were  utterly  ignored  until 
to-day.” 

The  reply  of  the  editor  of  the  News  furnishes  another  proof  of 
the  justice  of  the  President’s  characterizations,  for  in  the  very  jour- 
nal under  whose  sheets  it  now  takes  refuge,  namely,  in  the  New 
York  World  of  October  3,  1908,  appears  an  explicit  and  unqualified 
denial  by  me  of  the  story  referred  to  and  in  which  I used  the  fol- 
lowing language : 

“We  may  expect  during  a heated  political  contest  all  kinds  of 
stories  which  are  not  worthy  of  notice,  but  this  one  I wish  to 
denounce  in  the  strongest  terms  as  a lying  fabrication  without  a 
shadow  of  truth  in  it.  Neither  I nor  anyone  allied  with  me,  either 


20 


directly  or  indirectly,  at  any  time  or  in  any  place  in  America  or 
abroad,  ever  bought,  sold,  dealt  in,  or  ever  made  a penny  of  profit 
out  of  any  stocks,  bonds,  or  other  securities  of  either  the  old  Panama 
Canal  Company  or  the  New  Panama  Canal  Company,  or  ever  received 
for  the  same  a single  dollar  of  the  forty  millions  paid  by  the  United 
States.  I make  this  the  most  sweeping  statement  that  language 
can  convey. 

“As  everybody  connected  with  the  affair  knows,  I abstained  from 
receiving  the  forty  millions  in  my  own  hands  at  Washington  or 
New  York  as  the  general  counsel  of  the  company,  and  myself  ar- 
ranged for  the  payment  of  the  entire  forty  millions  direct  from  the 
Treasury  of  the  United  States  through  the  bankers  of  the  Govern- 
ment into  the  Bank  of  France  at  Paris  to  the  credit  of  the  liquida- 
tors of  the  two  companies.  There  it  remained  subject  to  the  order 
of  the  liquidators  until  distributed  by  them  to  the  hundreds  of  thou- 
sands of  beneficiaries,  and  not  one  dollar  of  it  ever  came  to  me  or 
anyone  in  anywise  connected  with  me.  Of  course  I do  not  refer 
to  our  regular  compensation  as  counsel.” 

I wish  to  call  attention  to  the  fact  that  upon  the  first  day  of  the 
hearings  before  the  Committee  on  Interoceanic  Canals  of  the  Senate 
of  the  United  States  in  February,  1906,  I voluntarily  made  an 
explicit  and  detailed  statement  showing  how  the  $40,000,000  was 
paid  by  the  United  States  through  Messrs.  J.  P.  Morgan  & Co.  as  their 
agents  to  the  Bank  of  France  at  Paris  for  account  of  the  New  Pan- 
ama Canal  Company,  and  also  explaining  the  subsequent  payment 
of  the  full  amount  to  the  liquidators  of  the  New  Panama  Canal 
Company  and  to  the  liquidator  of  the  old  Panama  Canal  Company, 
who  in  turn  distributed  the  same  to  their  respective  stock  and  bond 
holders,  numbering  hundreds  of  thousands  of  persons. 

I further  submitted  to  the  Senate  Committee,  with  the  permission 
of  the  Panama  Government,  a detailed  statement  of  the  disposition 
by  the  Republic  of  Panama  of  the  $10,000,000  paid  by  the  United 
States  to  Panama  in  1904,  accounting  for  the  payment  of  the  whole 
amount  and  showing  the  investments  and  disposition  by  the  Panama 
Government  of  every  dollar. 

Upon  the  same  public  inquiry,  I further  stated  with  reference  to 
the  proposed  Americanization  of  the  Panama  Canal  Company  in  the 
year  1899  and  the  proposed  formation  of  a syndicate  for  that  pur- 
pose in  that  year,  that  the  proposed  plan  “ never  matured  into  any- 
thing. It  was  never  consummated  either  by  subscription  or  by 
assent,  and  it  is  obsolete  and  an  impracticable  thing — proved  so  to 
be.  It  has  no  life  or  force  of  being,  did  not  exist  and  never  has 
existed,  and  is  as  dead  as  a doornail.  That  was  a fruitless  sug- 
gestion of  the  company  which  came  to  naught  and  under  which  I 
acted  as  their  counsel  solely.” 

The  testimony  taken  by  the  Senate  committee  is  a public  record 
and  was  available  to  the  editors  of  the  News  and  the  World,  and 
had  either  of  them  been  as  interested  in  publishing  the  truth  as 


21 


they  were  to  create  a political  sensation,  they  doubtless  would  have 
taken  the  pains  to  have  published  the  above  facts  which  I quote. 

I again  denounce  the  statement  wherever  published  or  by  whom- 
soever made  that  there  was  a syndicate  formed  by  American  citi- 
zens to  purchase  the  Panama  Canal  and  to  sell  it  to  the  United  States 
as  absolutely  and  unqualifiedly  false  and  untrue.  The  Americaniza- 
tion plan  was  an  entirely  different  matter.  It  was  a project  proposed 
by  the  company  to  the  Rivers  and  Harbors  Committee  of  the  House 
and  to  President  McKinley  on  February  27,  1899,  and  was  formally 
authorized  by  the  board  of  directors  October  10,  1899,  subject  to  the 
necessary  approval  of  the  stockholders.  The  initial  steps  were  taken 
by  me  in  October,  November,  and  December,  1899,  and  a company 
formed  for  the  purpose  under  the  laws  of  New  Jersey  for  . carrying 
out  the  instructions  of  my  client.  While  the  certificate  of  incorpo- 
ration of  the  Panama  Canal  Company  of  America  was  filed  in  New 
Jersey,  no  capital  stock,  except  the  nominal  capital  of  $5,000  set 
forth  in  the  certificate  of  incorporation  was  ever  issued  and  nothing 
further  was  ever  done  by  that  company,  as  the  records  in  the  office 
of  the  secretary  of  state  of  New  Jersey  will  show.  The  project 
adopted  by  the  board  of  directors  failed  of  approval  by  the  stock- 
holders in  December,  1899;  the  board  of  directors  in  consequence 
resigned  in  a body,  and  the  plan  then  and  there  forever  ended. 
The  period  covered  by  this  project  was  less  than  three  months;  not 
a dollar  was  paid  in  under  it  nor  a transaction  conducted  by  the  New 
Jersey  company  for  the  reason  stated.  The  plan  was  dead  and 
abandoned  over  two  years  before  the  company  finally  yielded  to  the 
pressure  of  the  American  Government  to  sell  at  $40,000,000. 

Now  with  regard  to  the  distribution  of  the  $40,000,000,  it  has 
been  made  to  appear  in  newspaper  comments  that  there  was  some 
mystery  connected  with  the  disposition  of  this  money.  There  is  no 
mystery  and  never  has  been.  The  fund  in  question  paid  into  the 
Bank  of  France  by  the  United  States  produced  the  net  sum  of 
206,000,000  francs,  the  sum  of  128,600,000  francs  being  placed  to 
the  credit  of  the  liquidator  of  the  old  Panama  Canal  Company,  and 
77,400,000  francs  to  the  credit  of  the  New  Panama  Canal  Company 
in  liquidation,  and  by  said  bank  paid  over  to  said  liquidators, 
respectively,  pursuant  to  a decision  of  arbitration  at  Paris  Febru- 
ary 11,  1902,  confirmed  by  the  Civil  Tribunal  of  the  Seine. 

, To  the  Senate  committee  I stated  that  I did  not  know  what  dis- 
tribution of  the  fund  had  been  made  and  that  I was  in  no  way  con- 
cerned or  interested  therein.  That  statement  by  me  was  true.  I 
had  no  pecuniary  interest  in  the  canal,  and  it  was  none  of  my  busi- 
ness, personally  or  professionally,  who  were  the  stockholders  or  bond- 
holders of  the  company. 

1 Since  the  recent  publications  I have  made  inquiries  in  Paris,  and 
im  informed  that  the  distribution  of  these  moneys  is  a matter  of  pub- 
lic record;  that  the  amount  received  by  the  liquidator  of  the  old 
Panama  Canal  Company  has  been  distributed  by  him  as  an  officer  of 


22 


as 

:o- 

■y- 

of 

is 

;e. 


the  court  to  the  holders  of  the  obligations  of  the  old  company; 
that  these  persons  appeared  in  person  at  the  office  of  the  liquidator 
to  receipt  for  the  moneys  paid  to  them;  that  they  numbered  226,2^6, 
the  laigest  number  of  individuals  probably  ever  appearing  in  person 
upon  a single  business  affair,  and  that  the  average  amount  paid  J 
$1:56.  The  complete  and  detailed  record  of  these  payments,  t 
gether  with  the  names  and  receipts  of  every  person  to  whom  pa 
ment  was  made  and  the  amount  of  such  payment,  is  in  the  hands^ 
the  liquidator  at  his  offices  at  50  Rue  Etienne  Marcel,  Paris,  which 
in  a prominent  and  frequented  part  of  the  city,  near  the  Bour^ 
easily  found  by  anyone  desirous  of  doing  so. 

As  to  the  fund  paid  to  the  New  Panama  Canal  Company:  Thiat 
company  at  the  time  of  the  sale  of  its  property  to  the  United  States 
went  into  liquidation,  and  I am  likewise  recently  informed  that  the 
distribution  of  its  assets  amongst  its  shareholders  was  made  through 
four  leading  banks  of  Paris,  the  Credit  Lyonnaise,  Societe  Generale, 
Comptoir  National  d’Escompte  de  Paris,  and  Credit  Industriel  et 
Commercial,  in  three  separate  payments  (July  15,  1904,  February  3, 
1908,  and  June  15,  1908),  covering  a period  of  four  years,  and  was 
completed  in  June,  1908.  This  liquidation  took  place  at  the  regular 
offices  of  the  company,  19  Rue  Louis  le  Grand,  Paris,  readily  found 
by  anybody  who  honestly  sought  to  find  them.  The  facts  concern- 
ing the  liquidation  are  a matter  of  public  report  to  the  shareholders 
of  the  company  (this  company  has  no  bond  issues)  and  were  the  sub- 
ject of  official  publications  from  time  to  time  covering  a period  of 
four  years  in  the  official  papers  under  direction  of  the  "courts.  The 
amount  so  paid  to  the  shareholders  of  the  New  Panama  Canal  Com- 
pany, as  I am  informed  by  the  liquidators,  is  approximately  129.78 
francs  on  each  share  of  the  par  value  of  100  francs— that  is,  they 
received  back  only  the  capital  originally  invested  with  interest,  less 
than  3 per  cent  per  annum.  I am  informed  by  the  liquidators5  that 
the  shareholders  to  whom  distribution  was  made  numbered  6,796. 

Neither  I nor  my  law  firm  nor  anyone  connected  with  me  ever 
owned,  directly  or  indirectly,  any  share  of  stock  in  the  New  Panama 
Canal  Company,  nor  any  of  the  obligations  or  securities  of  the  old 
Panama  Canal  Company,  nor  ever  bought  or  sold  any  of  the  shares 
or  securities  of  either  one  of  said  companies,  nor  were  directly  or 
indirectly  interested  in  them. 

I am  also  positive  that  not  a man  in  public  life  in  America,  in  or 
out  of  Congress,  ever  had  the  least  pecuniary  interest  in  the  Par  - 
ama  Canal. 

I do  not  know  and  never  have  known  of  any  American  citize  1 
who  has  ever  dealt  in  any  of  the  shares  of  the  New  Panama  Cana  1 
Company  or  the  shares  or  bonds  of  the  old  company. 

A further  instance  of  the  unwarranted  attitude  of  the  Indianapo- 
lis News  and  of  other  journals  repeating  the  statements  is  furnished 
with  respect  to  Mr.  C.  P.  Taft  and  Mr.  Douglas  Robinson.  In  th<h 
same  issue  of  the  World  (October  3,  1908)  I said  : 


23 


klThe  mention  of  the  names  of  Mr.  Taft  and  Mr.  Douglas  Robin- 
1 is|  another  evidence  that  this  is  a fake  story.  No  member  of 
■lft  family  or  Mr.  Douglas  Robinson  ever  had  the  remotest 


family  or 

miection  with  Panama  Canal  matters,  directly  or  indirectly,  and  I 
ver  saw  one  of  them  on  this  subject  before  the  United  States 
cquired  the  canal.  I never  saw  Mr.  Douglas  Robinson  in  my  life. 
^Jie  names  of  Caesar  and  Napoleon  might  as  well  have  been  used, 
>r  it could  not  be  more  impossible.  All  this  except  the  dragging 
of  jew  names  was  threshed  out  before  the  United  States  Senate 
mirmtee  by  the  late  Senator  Morgan.  Out  of  respect  for  the 
ad,  I [refrain  from  comment  upon  that  proceeding,  but  I feel  war- 
nted  In  saving  that  it  was  pursued  with  unparalleled  energy  and 
dii.  ?t  was,  however,  completely  exploded  and  refuted  by  the 
cts-iii'  the  case,  and  ended  in  complete  discomfiture.  There  is  not 
word  (of  truth  in  it,  and  I would  not  notice  it  at  this  time  if  it  did 
t concern  others.” 

The  Introduction  of  these  gentlemen  in  the  Panama  affair  is  like 
le  creation  of  a character  in  a work  of  fiction.  They  did  not  exist 
ill  the  sense  of  having  any  relation  to  the  canal  matter.  Neither  of 
tllem  ever  had  the  least  pecuniary  interest  in  the  business.  It  is  a 
ulatter  of  public  history  that  the  President-elect  never  had  any  official 
cjmnection  with  the  canal  until  months  after  it  had  been  acquired 
this  Government.  He  was  in  the  Philippines  as  governor 
iringffl.ll  the  years  in  question. 

Equally  perverted  is  the  fact  concerning  the  records  and  accounts 
the  two  companies.  They  were  not  delivered  to  the  United  States 
:ause  they  were  records  of  the  companies’  transactions  with  which 
United  States  had  no  concern.  But  as  a matter  of  fact  the 
3rds  and  files  of  the  liquidation  of  the  old  company  are  in  the 
ds  of  [the  liquidators  at  50  Rue  Etienne  Marcel,  Paris,  and  those 
ic  new  company  were,  on  the  final  payment  in  June,  1908,  depos- 
with  the  Credit  Eyonnaise,  Boulevard  des  Italiens,  to  be  pre- 
\ d,  in  accordance  with  French  custom,  for  a period  of  twenty 
ars.  That  corporation  has  the  custody  of  the  records  as  is  well 
fgiown  t<?  all  parties  in  interest, 
f The  whole  story  of  Americans  or  some  American  syndicate  buy- 
ing up  the  Panama  Canal  securities  at  a low  price,  or  at  any  price 
and  then  turning  them  in  upon  liquidation  at  a profit  is  a fiction 
and  a concoction.  The  money  of  the  United  States  went  to  France 
nnd  was  distributed  to  the  hundreds  of  thousands  of  foreign  owners, 
itone  or  wnom,  so  far  as  I know,  were  Americans. 


w 


